we want to thank kefen m kefinmadden. that was worth the price of admission coming on here. >> that was extraordinary. >> and let's just leave it at that. that was extraordinary. don't forget, tomorrow, 5:00 to 7:00 p.m., first responders benefited on long beach island. make sure you join us on monday. "squawk on the street" is next. good friday morning. welcome to "squawk on the street." live at the nyse.

a blowout session in shanghai overnight. best single day gain in more than three years on a pretty decent pmi. europe has also been a blend of red and green as the ft names ecb chief the person of the year. we're going to kick off with breaking news. for that would, we go to david faber. >> news on best buy, in the news yesterday. the stock up sharply. what we can tell you right now is the board of directors of best buy, and its founder, richard schultz, has been trying to put together a group to essentially buy the company in a go private transaction, have extended the deadline in which he would need to come with a bid for best buy and created a window in fact that will begin on february 1st next year and end with the end of that month on february the 28th. giving schultz the opportunity to look at not just christmas sales, but the end of their fiscal year, which will end at best buy on the 31st of january. and that window, again, will be 28 days long giving him an

opportunity to continue to try to cobble together a bid with private equity firms and those who might finance a potential bid for the company at whatever price that might come at, if it were in fact to come at all. no word in terms of if he doesn't, whether he'll still be able to try to nominate directors in terms of the board of directors post at the board of best buy. given the talk around yesterday, the indianapolis star tribune reporting that a bid was coming, as soon as this weekend, december 16th deadline, they pushed it back. the new window, february 21st to february 28th, giving them time to say, hey, how bad or good was business at best buy. not just for christmas, but for the full year. >> it's make or break moment for best buy. >> whether it will put them in the best position to do something or not. >> fine, he will move it out? every company in retail is saying, behind the scenes, guys,

tell me, how's it going? neilsen is saying, are you kidding me? we've got two weeks here. we don't know. we've got the gift cliffs, buy cliffs. >> there's not just the fiscal cliff out there. >> people believe best buy's on the decline, and christmas won't be that great, then you would probably jump to the conclusion that at the end of the day, he will walk away. >> right. and he will have all of that information. and there are some distressed players in private equities. sirburres has experience in that area. if you go from considering this a viable situation, to a distress situation, all of which we'll find out. again, that has been pushed out. one would expect the stock would react negatively after running up yesterday on the star tribune report that a bid was coming. even though we don't know what the bid was. i was not able to confirm that was in fact that was even the

case. >> good. so many people lose money in this stuff, and it pains me. listen, you read a local paper article, you hear that guy's got to know, right? he's in the same town as the guy. >> there was some thought that if they did come with a bid, it would be nothing more than a place holder that would be rejected. but giving them a chance to come back in january. certainly a rational response from the board. saying, you really want to give it a shot? we'll give you that opportunity. you can wait, you have 28 days in february. you can figure it out. >> nice scoop. >> thanks. >> very nice. >> all right. aside from that, we'll take a look at upbeat economic news out of china. the purchasing managers index rising to 50.9 in december. highest level since august. the surge also helped speculation the chinese government will take additional steps to support its economy. of the 15 times china's up 3%, since '09, s&p that day is up 13

times. almost every time. despite the futures today, is it a good omen for the markets here? >> look, there was a dichotomy in that government. there were people who were concerned about inflation. and there were people who said, listen, we're not growing fast enough. they do have a lot of levers. if they want to grow, i still -- i've been a bull on china. if they want to do 9%, 10%, they have the ability to do it. all they have to do is have a gigantic sewer infrastructure program. >> that's true. there's going to be an economic war conference held soon. it's believed the government will start to release growth forecast at that conference and perhaps unveil some further stimulus measures or tip their hat in terms of whether they are considering that at that moment. the key thing about the rally is not the big percentage decline, but the trading volume was extremely heavy. it had been extremely light over the past weeks. the trading volumes were more than double 30 day moving

average in china. it was on top of a gain last week of 4.1%. >> that's the best week in a year. >> exactly. they're wondering at this point, is there a turn-around in the stock market which will be re more reflective of the data we've seen recently. >> the big weakness there is that's got a lot of financials in it. but look, financials, they've been all down, too. if they can come back, china is a great story, remember, they've got a government that's -- it's not a partnership with business. it is business. >> it is business. >> that is china, incorporated. >> the korette su from the '80s from japan, it is a powerhouse and it will be more on the world economic scene as we move forward. >> you know, the job creators, the 2%, they laugh at us over there. >> they don't laugh, they look

at us warily, i think is more probably more appropriate. they also are taking steps in their banking system, we should point out. they've bailed out any bank, depositors have never failed to get their money. but they're trying to put in a -- according to "the new york times," at least, a deposit guarantee system as well for the banking system. >> sounds like all systems go there. >> we'll see if this continues next week. meantime, we'll talk apple debuting the iphone 5 in china today. the iphone news isn't preventing apple shares from falling in the market. cutting the price target to $700 from $780. he does maintain a buy rating and said apple needs to expand more geographically. it's not dead, it's not -- but it needs to find ways to innovate its products. we sort of saw this coming. steve had a caution note on

apple a few weeks ago which stalled the stocks. not entirely a surprise. he is obviously a well respected analyst on the street. >> when you have a price target that is well above the stock, there's tremendous pressure for you to cut the price target. like there was tremendous pressure to raise the price target. i want to warn people, there are people who have much higher price targets. the analysts will probably join the fray. not sit in the bunker and say don't worry about it. i suspect you can use the china slowdown, china not great story, to gin up a few negatives next week. be aware that those who have a $900 price target are saying, i've got to find some way to cut that in half. >> he said his chinese sources do not expect the 5 to do as well as the 4s. itv, wearable computers, or another category, we have faith

innovation is not dead. that's a relief, right? if he said innovation is dead, we'd have a problem. >> the $47 -- you know, what's incredible, here's a cash machine that has high earnings per share. when the stock goes into that vicious cycle down, people will run. steve is one to run. do the numbers have to come down? we don't know. people are raising numbers when the stock was going higher. now they're cutting numbers when the stock's going lower. you say, wait a second, that's what happens, the business turns down. or you can say that's the way the analysts play it. >> exactly. specifically for china, look how much market share they lost in the fourth quarter. they lost about half of their market share. went down to 10% in the second quarter. and steve points that out, saying essentially it's going to be a late mover in the china market. china mobile is 85% of the smartphone market. so not locking that relationship in now is really going to prevent them from competing

vigorously against the likes of a samsung. >> samsung is loved there. >> yeah. >> you'll hear people come back from china and say that apple's not hot. samsung's hot. i think we are all used to in this country to believing in apple. and china, they played hard ball in china. anybody who has played hardball in china has not succeeded. like google. first amendment, you know, tiananmen square. what's the first amendment in china, i don't think it's free speech. >> i don't think so. >> interstate commerce is as powerful as anything. >> tear down a neighborhood at any moment. >> another $156 million shares eligible for social, the social network rallied after last month's expiration and shares up 25% since the middle of november. november 14th, we went into it

thinking we'd get hurt. it ended up 12.6% that day, up 250. >> it did decline prior to that, in anticipation of the expiration. >> after a big run. it's got to digest. again, this is an interest per share situation. things are done at facebook that would justify the stock going higher. the short base was gigantic. do you sense a big run? >> i think the dynamic did change after the last quarter. and the discussion you talked about, we talked about it a great deal, what the trends really appeared to be in mobil. that seemed to change the conversation, and of course we came upon that huge lockup that only had the effect of sending the shares up percentagewise that we hadn't seen since the company went public. >> zuckerberg said, we screwed

up, we'll fix it, we've got ways. how many companies are willing to come on and ceos come on, say we screwed up, we did it wrong. previous conference call, it was like, okay, guys, we're going to get this right. you better have faith in us. we do have 1 billion customers. they have 1 billion customers here. it's important to remember the customer base is bigger than netflix. >> not all of them paying customers. >> no. but it's a juggernaut brand. and if they can find a way to monetize mobile, they're king. apple versus google. i started thinking, you know what, you should put facebook in there. >> wall street is waiting for data that could help set the tone for the open. we'll get breaking news on industrial production a few moments from now. later on this hour, diane olick's interview with brian n

moynihan. middling action here, the dow only up 15 for the week. so we'll see whether today sets the tone over all.

live from capitol hill, encouraging lawmakers to rise above gridlock. >> fiscal cliff is a made-up deadline. recognize me.

but i am your market data. i know what you're looking for. i'm not chained to your desk anymore. i'm faster and smarter now. and so much less expensive. i am your market data. and if i do say so myself, i have never looked better. superderivatives introduces dgx. data done differently. welcome back it "squawk on the street." rick santelli here. rising much more than expected, up 1.1%. capacity utilization, also ramped up to 78.4. there were changes to october.

and they weren't necessarily good. but they don't diminish the strength of the november. we had october's minus .4 extended down to .7. october's read originally at 77.8. now 77.7. but definitely strength in the current november read. >> thank you very much, rick santelli. talking about a big deal this morning, taking place in the nordic countries. it's not netflix. it is discovery communications, which as our viewers already know, derives more than one-third of its revenues from international operations. of all the big media companies here in the sufficient, it has the largest international presence. and that is only going to increase with today's deal. discovery paying $1.7 billion for the acquisition of sbs nordic. that had been a part of proseenin. huge german-based media company. includes 12 networks, norway,

sweden, denmark, finland. the purchase price is $1.7 billion. the company announcing the board approved a $1 billion increase in the share buyback. no timing numbers there, so we don't know if it's going to extend for quite some time, or they're going to be more aggressive in terms of that. in addition, they finalize a deal we first heard about a few weeks ago, 20% minority interest purchased for about $220 million or so, in the euro group sport -- euro sport group, i should say. which will give them an opportunity, actually, to have an option to purchase a controlling stake over time. and in fact as much as 100% potential ownership if they exercise certain put options. but discovery getting bigger and bigger in international, jim, where they had been a leader. >> so smart. my experience with him is he's a humble man. he is the envy of this industry.

got to figure out swl international. i mean, this guy, he runs that program. he runs it program over and over. >> the big question today is, how do you say honey boo-boo in nordic countries. it creates these cultural phenomenons again and again. >> and those that can cross borders effectively. >> did you say hoarders? >> i said borders. >> hoarders cross borders as well. >> every country has its hoarder. >> yeah. >> that's a human condition. >> those guys were killer, man. they stuck it right to red lobster 689 darden's report next week, be careful. >> but they have a good amount of cash on the balance sheet. some of that is being used for these acquisitions. we'll see how the stock reacts today. from my reckoning, they are buying at a lower multiple than they currently trade at at discovery. the deal is expected to be accretive.

unclear about synergies. but they do have a lot of operations on the ground in many of these countries already. we'll keep an eye on shares of discovery. >> powerful story. >> it is. eagles coming off a rough night. but cramer's going to show you how to score a touchdown in the market today. "mad dash" is coming up next. you'll want to hear from republican congressman nick mulvany from south carolina who has a history of voting against speaker boehner's wishes. looks like an update so far. we'll see how we're doing when it opens in a few minutes. ♪

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friday edition of the "mad dash." jim is watching ppg, among others. >> this is a guy who has taken this company from a commodity producer to a proprietary chemical company. he buys a paint business. we don't talk enough about ceos who are quietly reinventing their companies, not worried about fiscal cliff, not talking about woe is me. just reinventing their companies, getting rid of the commodity stuff that anybody can make. this guy is my hero. ppg is going higher still. >> that is unbelievable. >> isn't that a great chart? this is a chart of american industry doing it right. moving into asia.

eden's chart is not as good. but this is a guy, chuck bunch. he's a steeler fan, which i think is great. >> schlumberger. >> stocks in the trust doing well. we believe that the future for oil is good. but europe is weaker. did not expect that. stock will take a hit. probably not done going down. at this level, call it 65, 66, a great value. but not here. >> we've got decent numbers out of adobe, i think. >> adobe had been a siller killer. not all tech is disastrous. you know, the charters will get behind this. it is an inexpensive stock, it's not done. we had a lot of stocks that people had to sell on. so many people were negative on it, you can see, wow, a little

bit of good news, how far it can go. >> you mentioned some of the earnings next week. oracle is one of them. today, janny initiates oracle with a buy target. >> larry olson, very, very competitive guy. the stock is up about 23% this year. but again, if oracle gets it right, and i think they could be, accenture reports next week, too, these are american companies doing fabulously overseas. oracle will probably be better than expected. it is not an expensive stock. >> when we come back, bank of america shareholders have big reasons to smile. stock's been on a tear, of course. diane olick with an exclusive with brian moynihan after the break. and facebook, will it add to the social network's rally or put an end to it.

stay with "squawk on the street." the opening bell is in 5 1/2 minutes.

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on the street" live from the financial capital of the world. opening bell set to ring in about 2 1/2 minutes. we have time to talk a few stocks. we talked apple, facebook. on dave cody, on the front page of the journal, you talk about a ceo getting his hands dirty with this fiscal cliff stuff. >> cliff cody is one of the great guys around. fortunately we are next door neighbors. there are very few people who are so regular, that are also in power and doing a phenomenal job, that -- i want to put it this way. a lot of people at home, a lot of younger people, you do not finish last when you are a nice guy. you can finish first. he's a bridge builder. he has a great vision, that moved his company toward safety, health, engineer, power management. i don't know how he has the time to -- he mentioned, look, he had to cut into personal time.

there he is at dunk iin' donuts this guy is the real deal. if anyone is going to be able to bridge the gap between obama, business and congress, it's going to be him. >> your big thing is no vacation without legislation. >> right. >> the "washington post" said as of last night, the halls of the capital were virtually deserted. >> cody's the only guy working there. that's embarrassing, isn't it? >> the president is scheduled to go to hawaii a week from today. >> it's boehner and obama. >> there are things, there's a telephone. understand, they have phone service in ohio and hawaii. >> there's an urgency here that dave cody gets. why? because he has said, i'm not hiring until we get this stuff fixed. now, why doesn't that -- well, everybody, the job, small business job creator. come on, man. honeywell hires.

that means other towns do great. that means you get into a very virtuous cycle mode. david, it is not about the small businessman. the little businessman doesn't do well unless the big businessman does well. >> who are they selling to? >> honeywell just hired 200 people. >> no doubt about it. >> the opening bell here at the new york stock exchange for a friday. top of the screen, the s&p 500. nasdaq, avago technologies. >> single-family rentals, homes for rent, single-family rentals, that's the way it's sort of getting all that notion, at least today that some people are locked out of credit. they are renters, or renters

nation. >> the real estate investment trusts. >> every real estate investment trust, this is only -- this is a real aberration. 10, 20, 30, 40 years, people do not understand the power of that group. the yields aren't that great right now, but if you look at 98%, federal realty, and in the shopping center business, when you look at some of these hotel reits, they've been very strong. >> best buy, the biggest loser this morning. david, it's your fault. >> you created the jillian cole -- >> that company has come out and released a press saying, we told you at the top of our show, that best buy has extended, or created a deadline window, if you will, for the founder richard schulz to make a bid or not. it's been extended and pushed to february 1st. the board would have 30 days to make a decision. or come as late as february

28th. they will, of course, have important information, that christmas sales, how is the entire fiscal year for best buy. and 30 days to decide if it's a bid they want to accept or not. that will be it. we'll see whether it actually happens at all. i would also point out that the board has as well amended its buy laws to director nominations from the 22nd of february, to the 15th of march. >> that's interesting. >> and so let's say he makes a bid, it gets rejected, it would still allow schulze to potentially run a slate to compete to get board seats at best buy. a company which, by the way, he owns 20% of. that 20% stake has been falling in value, virtually every day, except for weird days like yesterday where it was up yesterday. >> good money after bad, my friend. good money after bad. >> more time and information, it seems like a $20 share bid is farther and farther away.

>> one would imagine that would be the case, unless they had some sort of blowout christmas, or some sort of trajectory in sales, that is highly unexpected. the last word we got from the company is, hey, free cash flow is coming down. it still generates a good amount of cash. you have to think, maybe it's not completely inconceivable. there could be a bid. that's what private equity firms look like. when you watch that going this way, and if that continues, it's certainly very tough to get financing, and a significant equity check. but as the price keeps coming down in stock, the equity has to be less, given how much he's got rolling in. >> why doesn't he just go watch the vikings. adrian peterson is very good. >> very good? he's off the charts, that man. >> having a great season. >> i don't think grady -- he had a knee injury that guy. ran for 2,000 yards. that's incredible. >> he's able to put bridge between the bridge cliff and fiscal cliff.

if adrian peterson were to come to town, it would be -- >> no, no vacation without points scoring. >> that's right. >> taking a look at the china related stocks trading. the fxi, up by 1.5%. dang dang doing quite well. 4.3% gain for the week. finishing off the week very strong with yesterday's gains. we're seeing that translate here in the united states. >> funny, you've got oil doing quite poorly. if china turns around, they're going to be a big driver. peabody saying they're a trough. these are -- remember coal, i think what could happen is joint global saying, listen, we are at trough in china. and joy is a great way to play. caterpillar is a china play.

cummins is a china play. by the way, starbucks is a china play. and yum is a china play. and i believe in david novak that yum is going to be able to readjust, build a lot of kentucky fried chickens in the two, three, four tier cities. they're equal to chicago, right? >> yeah. 200 cities in china the size of chicago, in terms of population. >> and those are small. >> can you imagine the lines at starbucks there? a cappuccino machine goes down, it could shut down the whole city. >> my daughter was asking, how did there come to be so many people in china? >> 200 years ago, i guess, that's a long time -- >> the nation building? >> i didn't have an answer. >> discovery will do us -- >> fill me in. i need to brush up on my --

>> but david faber isn't ignorant. his hair looks better. china, here's the story. >> hair looks better. then china better. relative issue. >> it's a relative issue. thank you. very nice. let's check with mary thompson, on the floor in for bob pisani today. >> weakness across the board. weakness in the nasdaq, down about 20 points. the dow lost in early trade. a little more modest in the s&p, down 4.25%. traders saying the fiscal cliff headlines will continue to dictate trading. and here there was a little reaction in the futures market ahead of today's opening bell on the data and the better than expected production numbers. overseas, last night we did have some more bad news out of japan with business sentiment there weakening. as melissa was mentioning earlier, positive news on the

manufacturing front in china. that's giving a lift, as she pointed out, to a number of mining stocks. while it's also giving a lift to energy, or to oil prices this morning, i should point out, some of the big name oil companies were a little bit lower in early trading, again, those being exxon as well as chevron. the traders said the bid in the market remains strong despite concerns about the fiscal cliff in large part because the investors remain positive going into 2013. this is the markets right now as we look to close out the week, showing slightly -- slight gains for this week. as we head toward the close of the year. a couple of stocks we're keeping an eye on today. veriphone coming out with weaker than expected forecasts, in large part because of weakness in latin america where it gets about 23% of its revenue. stock down over 7%. united technologies, saying 2013 dividance should see growth

above 3% to 5%. earnings of 585 to 616 a share, also buying back stock. its shares under a little bit of pressure as well. we want to close out with adobe. the company came out with strong numbers in small part because of an increase in subscription. its stock reflecting that, up about 7%. the dow paring its losses, down only 2. >> i have to come back to what carl said, it just doesn't go down a lot, not go up a lot. it's kind of flatlining. let's hit the bonds. rick santelli in chicago. go ahead, rick. >> thanks, jim. >> it wasn't only a fed meeting statement, new programs, new thresholds, longevity programs, it was also a supply week from 10s and 30s. look at 5s, they're still a bit elevated, even though we're turning down on yield, a little

up in price. neutralizing some of the post-fed selling. but the longer the maturity, look at 10s and 30s, more developed. a lot more buying on the long end. it is post supply. and many believe some of the sell-off based on the fed statement, most lip long, is being neutralized. if you're one who says you've got to sell now or forever hold your position, maybe the market will change your mind going into the weekend. and the dollar index, look over it over the last two days. it looks like a spastic ekg. dollar doing good against the yen. not doing well against the euro. how does it play out? kind of mitigating factor. now we're going to talk some telecom with david faber. >> thank you, rick. while this is now more a french company than an american one, you have to remember when lucent was one of the more widely held

stocks in this country. let me get you to the news this morning. the "wall street journal" reporting lucent has secured $2.1 billion in new financing. essentially a deal put together by credit suisse and goldman sachs. various ma turts. you see it right there. that, together with the cash it already has, should be enough for lucent to weather a very a difficult period, where it's going to have to repay some of its debt maturities. there had been concerns about the company's solvency. that being reflected when you see it in the stock price of late. the company having a difficult go of it, to say the least. they've got a european employee base. not so easy to cut them back very quickly. and, well, that's been a difficult problem for the company. in addition to many others. what does this mean? well, it means you can at least forget about the possibility for now that the company would have to sell shares, dilute everybody

even more in order to raise money to pay back some of those maturities that are coming in the future. and it also may be better positioned now for what some at least are saying is an expected increase in the capital expenditures from the telecommunications providers in this country. let's not forget it was only a few weeks back, we had randall stevenson on. at&t significantly increasing its expenditures over the next three years, far beyond what had been consensus, taking into effect consensus they went about 2.5 to $3 billion above that per year. that's money. and then there's soft bank. when that deal closes with sprint, and they do buy in clear wire, let's assume, they're going to have to spend a lot of money there. not to mention to try to at least fulfill the dreams of mr. massa, massa sun in terms of d adding capacity. >> and towers. >> do you buy towers, erickson and juniper as a result of the

increase in cap x from u.s. providers. >> i don't know. i would rather buy cisco. these companies, i remember when a avatel was good. the spending on american tower, sba communications, not on software. lte, you've got to go to g 5 -- >> we're already moving at g 5. >> g 3 is not playing this weekend. >> i think g-3 is -- >> dad said he would play. but apparently he disagreed. >> how about those knicks? >> oh, man. >> the finger, now the ankle for melo, right? >> he's tough. he'll be all right. >> i went to the rolling stones last night and did not go to the eagles. let my make that clear. >> coming up next, diana olick's

exclusive interview with brian moynihan. take a look at this morning's early movers on wall street. adobe topping the list of 6.5%. try running four.ning a restaurant is hard,

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bank of america ceo brian moynihan speaking at a brookings event in washington. but first, he is talking with cnbc. diana olick is with the ceo of bank of america. >> we're about to talk about what we're going to see going down the road. of course, we have to talk about the president and who better to do that than ceo of bank of america brian moynihan. thank you for joining me. obviously the elephant in the room is the fiscal cliff. we're told it's already affecting the economy. how is it affecting your business, and the mortgage business going forward? should we go over the cliff, even temporarily? >> our bis is impacted by it. if you think about businesses, the impact of the uncertain

around the fiscal policies in the united states starting last summer, summer of 2011, excuse me, with the issues around the default and debt ceiling, and continue through to now, has caused them to take aggressive action. the real question is does it affect the consumers. we've not seen the consumers go backwards, yet you saw the confidence numbers come down. i think the consumers who have been pretty steady will continue to be there if we get it solved soon. >> bernanke said he's putting a deadline on rates. if you talk about the consumer and the fear that mortgage interest rates could go up soon, do you expect to see rates rise at all this coming year? >> the interest rates? >> yes. >> i think the chairman's been very clear about keeping the rate structure down to allow this human economy, which is multiples bigger than other economies in the world to move forward. our experts would say the interest rates will stay where they are for quite a long period

of time. >> what about the mortgage interest deduction on the table during the cliff negotiations? do you think that's a real possibility to lose that for consumers? >> i think that's something, my guess it will come more in the structural changes around tax reform. which part of the debate is agree to things now, and actually look at corporate taxes and personal income taxes. my view would be probably better suited to take the time that it takes to think all those things through. i don't think america is ready for massive changes in the core structure taxation overnight. >> you don't think it's on the table? >> i don't know if it's on the table or not. but from general consumers you would rather have that to come up in the long term to change the way, broaden the base, change deductions like that and put it in when people least expect it. >> you have to deal with the past, and that is the ills of the housing crisis. bank america has already wiped out $7 billion in principal. you're set to finish your obligations, you've said, by the end of that first year, which is

in march. do you expect bank of america to continue writing down mortgage principal even after that, in the form of loan modifications and short sales, more aggressively than you have been? >> let's start back from the beginning. we modified short sales and other remediation programs for consumers struggling for 1.5 million borrowers. all those programs continue. the settlement will complete mostly by the end of the year, and end of february, and march, and completed the entire undertaking under that settlement. the programs going forward will provide for similar relief. i think we have offered principal reduction to all the people we own, the asset we can offer that's been done. that is largely done. after that, it will be more the modifications, in that debt of gone on under other types of programs. >> when you talk about moving the mortgage market forward and winding down fannie mae and freddie mac, do you see that is private investors getting back into the mortgage market, a real possibility in the near future?

>> it's not in the possibility, it's a certainty. the question is, what we need for that is to get the rules straight. i think the capital is out there. as the rate structure moves back to normalized, and as the fha have lowered the -- increased the cost, the government support, you'll see the private market will come in and start to absorb it. i think long term we have to get it back in. it is unsustainable in the current position now. we've got to get the government part out, the private label in. now the asset has a value. again, the rules hopefully becoming certain over the next 6, 12 months, that will come together. the investors want the product today. and the question is, can we get a product together to give them. >> finally, for your business. you've been winding down your mortgage business, whether it's correspondent lending, warehouse lending. is bank of america going to stay in the mortgage business? >> sure. we're going to be growing the mortgage business for our customers.

we have 30 million checking customers and a low penetration of mortgages. as we watch this thing shake down from countrywide and get that behind us, we'll have 5 million, 6 million more mortgage customers. we intend to grow in our production. it's grown every single quarter and we'll continue to do that. we've changed our positioning to be direct to consumer away from providing wholesale credit to third parties to make mortgages. we think that's a better position for our company. >> mr. moynihan. that's all the time we have. thank you so much for joining us. >> diana, thank you very much for that. with brian moynihan in washington. laying out a frimwork where mortgage deduction is not hurt, or not taken away, not limited by any means by capitol hill. >> there's a lot of worries about the interest margin for all the banks. the banks did well. it's an inexpensive stock. >> and monster run the past year 689 monster run. >> huge run. countrywide did not.

ever since buffett -- buffett is a brilliant investor. warren buffett got that preferred. called the bottom on the bank of america. >> dow sitting on a four-point gain. apple not that far away from the november lows of 505. last check at 514. here's what's next on "squawk on the street." >> coming up, before you start taking off your friday trades, listen to what cramer says. don't worry, it will only take a minute. 6 stocks in 60 minutes, "squawk on the street" will be right back. with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start.

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big hour for "squawk on the street." next hour appears to be even bigger. >> david faber just confirmed, the man at the helm of discovery for an interview in ten minutes' time. heat and fire to the fiscal cliff debate, with a left-right joust on where we go from here, on the quietly spoken jim

mccaughan. back to you. >> hearing from jim, and looking forward to seeing you, simon, in a few moments. >> i'm jealous david got that. this is absolutely one of the most no catalyst stories. downgraded futures, right. >> six flags, outperformed. >> if you think that gasoline's coming down, they're going to have a good year-over-year performance. >> este lauder. >> they don't like clorox. they don't like colgate. they like beauty. beauty is not skin deep. high price. >> ethan allen. >> this is all about the stock market and fiscal cliff. they do well with the psyche. psyche getting negative, washington. >> ubs cutting wind. >> china coming back? what, are you going to start -- steve winn i trust. >> and william blair cutting rent. >> rent's doubled.

that's kind of like saying, it's gone there. rem is a little too hot for me. >> what's tonight? >> i'm going over the stocks for next we're. whether it be the dardens of the world. a lot of consumer sentiment stuff. nike is the one i'm worried about. china, i'm worried about inventory there, slowing north american running shoes. footlocker positive today. nike is one of those stocks, carl, that rips people -- we talk about apple all the time. people like to talk nike. >> not to mention these tax issues in oregon. >> 40-year deal they're looking for. >> we'll see you tonight. >> okay, buddy. >> discovery communications striking an overseas tv deal. the ceo will tell us what it means for his company. and apple 5 arriving in china today. [ male announcer ] you are a business pro.

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welcome back to "squawk on the street." let's get the road map for the next hour. discovery in a $1.7 billion deal

for nordic networks. >> new york city testing a program to hail cabs from your phone. taxi limousine commissioner will join us. >> our david faber, not only bringing sas love, but best buy's board and richard schulze agreeing to extend the deadline for possible takeover bids. what does the company do now. >> discovery communications says, carl just said, announcing a $1.7 million deal, adding to what is a growing national portfolio, and significant business already in business. david zaslav joins us on the phone for an exclusive interview. david, always a pleasure. >> david, how are you? >> i'm doing fine on this friday morning. $1.7 billion goes out the door to buy sbs, nordic. another $221 million to buy 20%

of euro sport group. why are you spending all this money overseas? >> well, first, we're the leader outside the u.s. in pay tv today. when i joined the company six years ago, it was 10% of our business. today it's over 35% of our business. the growth outside the u.s. is much more substantial. there's less competition. on average there's between 40 to 50 channels versus 200 here. a lot of the technology we're seeing here in the sufficient, we're not seeing that in latin america and western europe yet. sbs is a dual revenue stream business. we're buying it for two turns lower than our multiple. we're already in business in those markets. those markets for them are substantial. they have between 25% and 30% market share in norway, denmark and sweden. they're significant in finland. we have a team on the ground already, so we have meaningful synergy. on top of that, we bring euro

sport, which i'll talk about in a minute, into play. it gives us a very substantial business. not just in nonfiction, but also in fiction and sports across a number of very stable countries. and aside from being two turns below our current multiple at having synergy, we also have nice tax advantages in the transaction. sbs became an easy one for us. i think it will help us grow faster. >> on the financial side of that, you mention, of course, the multiple lower for what you're buying and what discovery currently trades at. and you mentioned synergies. i assume this deal is going to be a creative win right away? >> this deal will be creative immediately. i think it makes it attractive for us. you know, this, together with sbs and euro sport, we will be the largest programmer in europe, and we'll be the largest pay tv programmer -- global

programmer outside the u.s. it really enhances our overall strategy of taking our great content, discovery, tlc, animal planet, science, i.d., we have 14 channels here in the u.s. we've taken a lot of that content all of which we own and taken it around the world. this helps to supercharge that international story, and reinforces the fact that as a global company, we're much stronger. and geographically, we're much more stable in position for growth. >> to what extent is it as a vote as well on the u.s.? there's continued concerns. they may not be realized for years, that the bundle doesn't hold together, particularly when it comes to sports programming. as you diversify your revenue basis further and further away from the u.s., do you worry about that when the bundle falls apart? >> actually, we're finding substantial growth here in the u.s. in november, we had -- we grew

our market share here of our 14 channels almost 20%. for the year, we're growing high single digits. in the u.s., we're still finding growth. but the fact that we can have this geographic diversity is important to us, because there's a number of markets. in latin america we have five of the top 20 channels. and latin america is still only -- mexico's 40% penetrated, brazil 26% pen trade. we've seen more growth in mexico and brazil in terms of subgrowth than the u.s. has seen over the last five years. so what it does provide for us is it provides kind of more supercharged growth. our international business, as good as our domestic business is, our international business has been growing much more substantially over the last couple of years. just to give you a sense, when i started it, discovery, our whole company was making $700 million. and international was about $100 million. this year we'll make more in our

international business than our whole company five and a half years ago. so we do see international. and that includes asia, and it includes fast growing markets like russia and turkey as well as western europe and latin america. but we think that that is a key differentiator for us as a company, that we have so many great platforms around the world in such geographic diverse tiff. and our international margins are close to 50%, because we use the content from discovery, animal planet, science, i.d., around the world. >> david, simon hobbs has a question he wants to get in here. >> would you like to buyske buy b in the united kingdom, david? >> it's a great business run by germ my derrick. but that's not what we do. it's primarily a distributor. they're directv on steroids. they also own a number of channels. but that's not what we do.

we're very excited about this new deal that we announced today, the southern deal of the euro sport. euro sport is a very unique platform. it's a sports channel between one and three channels in 59 countries. >> david, if given the chance, will you acquire a majority stake as this agreement allows for over time? >> we're going to see over the next two years, it's a great structure for us. but i will say this, there is -- they are the leader in sports all across europe. there is no platform that even comes close. in fact, there is no platform that's really multi-country. so euro sport is a great brand in 59 countries. but more importantly, they're in the sports business without paying a lot of money for sports. the big-time sports, the kind of stuff that you see here in the u.s., where cable programmers are paying a lot for the nfl, for baseball, for basketball, and then charging huge fees, that's not the game that we're in with euro sport.

the euro sport is -- the concept for euro sport is they have much more niche sports. so they'll have tennis, they have skiing, they have curling. >> david, you're not able to charge carriage as espn would here in the united states? >> no, it's actually dual revenue strength. in those 59 countries we have between one and three channels with euro sport where we get subsidies. and the attraction for us is, we're in all 59 of those countries with between six and eight channels of our own. in most of those markets, we're the number one channel for men, and we have a top channel for women. when you put that together -- we think that we have some more value to bring to advertisers and distributors. >> we've got to wrap it up. but real quick, are you going to buy the stock back quickly or is that just sort of an addition here that will take time? >> we have 400 million left. we did the additional billion because we believe in the

company. we've been aggressive buyers this past year. we intend to buy as much next year as we did this year. because we think that our stock is a good value right now. >> we'll leave it there. david zaslav, as always, thanks for joining us. >> thanks, guys. >> ceo of discovery. >> the tech giant hoping to get in the market share as the biggest market for america right now. apple trading 512. down on the session overall. more from beijing. >> apple's largest store in asia is right here in the chinese capital of beijing. it's a popular shopping district, and people are braving the cold weather in order to get their hands on the iphone 5. china is apple's largest market outside of the united states. in the last fiscal year, the company generated $23 billion in

sales just in this market. people love apple products, because they're a status symbol, a sign that you've made it. the average income in china significantly lower in america, but people are willing to pay $840 for an iphone, 30% more than than in the united states. but just like back home, apple faces increasing competition here. samsung is a big seller. a lot of new chinese brands that you probably never heard of are selling similar phones for a lot, lot cheaper. but apple is staying in the game. the iphone speaks chinese now, and the company also sells iphones to two mobile carriers. everyone's always wondering whether or not apple's going to be able to ink a deal with the country's largest player, china mobile, to get access to that company's 700 million customers. cnbc, beijing. >> thank you. it's not doing a lot for the stock today, down more than 3%

at this hour. frustration from wall street to washington over the fiscal cliff. after last night's face-to-face talks between the president and speaker boehner, what's the best solution for avoiding this mess? a left versus right debate is coming up next. a little bit later, two movie studios counting on the hobbit to dwarf the competition this weekend.

a tough morning for one oil

services firm. hi, bertha. >> hey, melissa. schlumberg schlumberger, top oil services company saying north america activities weaker than anticipated, both on land in the u.s. and in western canada. the combined impacts on profit estimated to be 5 cents to 7 cents a share in the current quarter. the stock down today. that decline now makes it fractionally negative year-to-date. >> the president and house speaker boehner met face-to-face last night at the white house discussing how to avoid the fiscal cliff. john harwood is one of the few people left in washington with some of the details. morning, john. >> reporter: morning, carl. we had a flurry of excitement yesterday afternoon when the meeting was scheduled. republican leadership aides told me a shakeup is in the talks. that's why they were meeting. when the speaker left after meeting for 50 minutes in the oval office with the president,

and treasury secretary tim geithner, we really weren't much closer to a solution than we were before. here are the main sticking points were i still stuck. we're talking about tax rates, republicans don't want to raise top tax rates. they agreed to more revenue. there's a disagreement on that. the president doesn't want to negotiate until they concede that point. entitlement savings. nobody really wants to spell out entitlement savings on either side to a terrific extent, because those are very popular programs. finally, the debt limit, which is something the president says he's also not going to negotiate on. he wants republicans to essentially give him cart blanche on that issue. they're resisting. we've got a gridlock with just a couple of weeks left before the end of the year, carl. which i still am optimistic it will be settled ultimately, either just before or just after january 1st. but it is increasingly difficult to be optimistic in this situation. >> so are you saying you're getting a little nervous with your prediction, john?

>> yes, i am. my optimism is being pummeled and challenged every single day. i think that we're waiting for republicans to figure out the terms of retreat. they know they're going to lose on tax rates. but it's difficult for them to do it. republicans don't identify themselves with raising taxes, and very difficult for the speaker to bring his members along. i still think it will happen eventually. we're going to have some sweaty palmed days before that happens. >> a lot of soul searching going on today, john. thanks so much. we'll see you in a little bit. john harwood in washington. what happens to the economy if in fact we don't make a deal? office of management and budget, now an economist at the heritage foundation. good morning to you. >> good morning. >> you heard what john just said. "washington post" today, in their words, hope all but lost for getting a far-reaching agreement by year end. we're getting a couple more

analysts' notes this morning. their words, chances of a grand bargain have diminished significantly. have we taken a dark turn in the past 24 hours? >> well, we're losing time very rapidly, that's for sure. the opportunity for a grand deal is nearly gone for the simple reason that there isn't enough time to negotiate the details, write it up in legislative language if it's to be done by january 1st. what we're left with really is two primary alternatives. one, just go over the cliff, which is increasing in probability. and the other, frankly, is to kick the can down the road again, kick it down into january, february, march, when the debt limit might come up around that time. the continuing resolution continues around that time. if there's a sense of movement or excessive sense of fear, you can find both sides saying we don't need to go over the cliff right now, let's delay this for a while. that's not the best outcome by

far, but it's a possibility. >> which one of those two rather bitter pills is more likely over the next 16 days? >> i have no idea. i put it at 50/50 for lack of any better information. i don't really know what the president's internal plan is, i don't know what john boehner's plan is. these are two cool cats negotiating in a tough environment. unless you really know what they want, you have no way of predicting which two outcomes is more likely. >> we're joined this morning also by a former labor secretary robert risch, he joins us on the phone. we might have had camera issues, but mr. secretary, good to have you with us this morning as well. good morning. >> good morning. i wish i could be with you visually. but we have to settle for voice only. >> better this than nothing at all. given what j.d. just said over the next couple of weeks, did the chances of a deal really take a hit in the last day or two? >> i'm still optimistic. >> why? >> i think that the chances are still better than 50/50.

every time we've had any kind of deal, in fact, every time the two sides have been very close on almost everything, it's come down to the 59th minute of the 11th hour. i think it will happen tuesday. if it happens at all, it will happen tuesday. >> do you believe that come new year's eve, treasury smooths this out by withholding tax rates? are we going to start to feel the effects on january 1st? >> unfortunately we will feel the effects with withholding on january 1st. but the democrats are clearly going to introduce legislation the first thing january 2nd to cut taxes on the middle class, because obviously the bush tax cut will have been expired. and that tax legislation will be retroactive to january 1st. and that will put the republicans on the spot because republicans will have to essentially choose between a tax cut for 98% of americans or no tax cut at all. >> what about the idea,

especially amongst physical conservatives that, all right, we'll go over the cliff. you heard about broadening the base. guess what, everybody's going to be paying a lot more in taxes. we'll be cutting the defense budget in a big way and actually making progress on the deficit. what about that argument that says it's not that bad? don't worry about it? >> j.d.? >> well, it is that bad. that kind of a massive tax increase is unwarranted. it is harmful to the economy. it's so bad, in fact, that in anticipation of the harm it would do, the federal reserve doubled down on its dangerous policy of quantitative easing. they only did that for one reason, they're so worried about the future, now we'll come along with the huge tax increase, and spending cuts, a dangerous policy to just say, okay, let's just go over the cliff. we may end up doing it. the secretary's exactly right. these are tough negotiations. and like all tough negotiations,

they almost always get settled at the end. but the problem is, the time frame is shrinking quickly. the secretary's suggestion of tuesday is probably close to right. if we don't have something pretty firm at that point, we're going to have to go to one of the two alternatives i described, go over the fiscal cliff as bad as that is, or agree we're getting close and kick the can down the road to early next year, and continue to fight. sometimes it's better just to live to fight another day. >> mr. secretary, i was fascinated to see you right in the financial "times" earlier this week, that as far as you're concerned, the deficit conversation was cut here in the united states. you sound like an old school european before the bond markets turned against them. >> i am old. but the fact of the matter is, right now the biggest problem we face here in the united states, and certainly in europe as well, is on the demand side. there's simply inadequate

aggregate demand. and because businesses are not going to expand and hire without adequate consumers, and consumers simply don't have the money, the median wage continues to drop. and we're seeing a labor participation rate that is still very low. it's among the lowest -- just about the lowest in 30 years. given all of that, the major question that we ought to be addressing right now is reviving aggregate demand, getting growth back, getting jobs back, and then secondarily, and second in order of sequence, would be the budget deficit. >> mr. secretary, j.d., thanks so much for your time. we'll continue to have this discussion until we get an outcome either way. >> take care. bye-bye. >> thank you. best buy shares falling on news broken by david faber. the company's board and founder chichd schulze steppextending t deadline.

that is coming up. imagine being able to hail a cab with your smartphone? apple taking a step toward making that a reality. we'll talk with the new york city taxi/limousine service. maybe he's getting here by cab. we'll see. always wait until the last minute. can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery.

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the taky hailing experience in new york city is about to undergo a rather cool change next year. users can use their smartphone apps to hail street cabs. thanks to a one-year pilot program approved by a vote yesterday by the taxi and limousine commission. david is the commissioner, and he joins us here at post 9. good morning. >> good morning. >> you have a program that starts from february, one year long. i download an app and press an icon. what happens? >> the driver will have ten seconds to accept the trip. if driver accepts it, you get a message back that says, taxi 7 a 94 is on the way to get you.

they estimate how long it takes based on how far and you wait until they get there. >> they switch off their lights and i can pay potentially by paypal through the system that i hailed the cab from. >> there's not one single app. we're opening up to the market. and different apps will do different ways. some will just charge you a surcharge to find the taxi. others you'll pay for the trip on the app. i think most passengers will want to put their credit card information into the app and they'll send that to the taxi. >> do you get a cut of that surcharge? i'm wondering how the city could benefit from this, if at all? >> the benefit to the city is if it's better for passengers, it's better for the city. >> how long do i have to stand with my arm out whilst taxis pass me with lights off? because someone hailed them halfway across manhattan? >> i think the main way people get taxis is the old-fashioned stick your hand in the air. especially during the day in midtown, downtown.

i don't drivers will need this app to find passengers. there are plenty of passengers. this app will be most useful late at night, on the edges of the taxi service area. that way, a taxi knows there's somebody three, four blocks away. >> didn't they try this in the 1980s? wasn't it abandoned because it didn't work, because there weren't enough taxis to fulfill the plan to come through? >> in the old day, it was both by radio and street hail. then they created the black car and car service industry. but now, with technology, you can have a car do both of these, and they can figure out the most efficient way to operate themselves. you know, we think you let the market figure out what's the most efficient. >> you have to think, in the post theater, coming out of the theater, you know you won't get one in midtown, or it's raining. the equivalent of the modern-day calling a cab, so to speak.

>> it doesn't make more vehicles on the street. at the busy periods, rush hour, i don't think it's going to help you. rush hour in midtown, it's not going to help you find a cab faster. what will help you is late at night on the edges of the area, a taxi that would be a few blocks away and otherwise wouldn't know you were there. >> why not charge for this convenience? >> that's up to the apps in the marketplace. we expect that they probably will charge a surcharge. some may be able to do it just on advertising. and make it free. let the best business model win. >> commissioner, before we let you go. throughout the summer we had a lot of comments about what happens happening in europe and the need to liberalize the taxi systems in italy and so forth. are you comfortable with the system you have now in new york? i understand the medallion changes hands for $800,000. so you have a few people who control a lot of these licenses. who are creaming off most of the profits. then you have often first generation immigrants who are tearing around on the street 12-hour days trying to make a

living? is that fair? >> medallion now trades for $1 million. so i think that does prove your point in a sense. look, we are -- the biggest issue in new york city is outside the core service area in midtown, downtown manhattan. mayor bloomberg has gotten legislation out to let us create a whole separate class of taxis that will operate in the boroughs. we do need more cabs. that $1 million price -- >> did it get approved? >> the governor signed it, the taxi owners, they have a lot at stake. they've sued and it's in court now. we're going to get a final decision by may or june. i'm sure we're going to win and put the new meltions on the street. >> did anyone find my wallet? >> that's the most common call we get. with the gps in the taxis now, you know, if you left a passport, a laptop, we can track down what taxi that is, and if

the driver is honest about it, as often they are, we can get it back to you. >> come back and update us with how it's going from february onwards. the commissioner there for taxi/limousines in new york. tweet time this morning. one club in china has literally embedded 300 kilograms of gold bars in the floors, under some transparent glass. customers here are literally walking on these things. about 100 million yuan, as a matter of fact. they said china should use the bars to do what? we'll get your -- >> reminds me of the cnbc dance floor at the christmas party. >> the gold bars. coming up next, navigating the market environment amid worries about the fiscal cliff. much more "squawk on the street" after this. americans are alwayo work hard for a better future. since ameriprise financial was founded back in 1894,

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gave them a month to decide whether they'll set up their own health state exchanges or default to a federally built exchange. bertha coombs is tracking what each state is doing. it's pretty patchy by the looks of it, bertha. >> it's patchy. although the numbers haven't really changed despite that one-month extension. the online exchanges are playing a key role out of the obama care in 2014. under the accountable care act,

every state has to have one up and running by october 2013. last night, according to the kaiser family foundation, 18 states and the district of columbia say that they are going to be building up their own. those are the states in blue. 24 at this point have opted to have the government build and run their exchanges. arkansas is one of six states pursuing a hybrid partnership, what's called a partnership exchange where the feds build the exchange and the state will actually help run it. florida and utah are the two states that are technically undecided. at this point, it looks like they're also going to default. they just haven't notified the obama administration officially. the federal model, the reason they're going to do it for many of the states beyond political reasons is concerns for the big costs to build these out. massachusetts, health care connector, the online marketplace, and back office call center, and support staff, serves as a model for the new state exchanges. but the base state is spending about $100 million in federal

grants to build up the new data bases and infrastructure required under obama care. >> it requires building data linkages with the federal government, so we can send them information about people who are interested in shopping for coverage in massachusetts. and determine whether they are financially qualified for subsidies, or financial assistance. >> they say the ten-month timeline is really tight. and to get this right, by next october, well, the stakes are high. >> they're really going to get one shot at not reinforcing the idea that public sector agencies can't operate at a level of efficiency, and quality that private enterprise can. >> you don't want apple mask type of situation on your hand. the companies involved in this opportunity, check out my stories on cnbc.com. >> thank you, bertha coombs. that and the fiscal cliff

weighing heavily on investors' minds. how should you navigate the market in these uncertain times. jim mccaughan is here. always good to see you. >> great to be here, melissa. >> 17 days left to go. >> yep. >> how confident are you that something will be done? >> i suspect what's going to happen is the senate tax bill will go to the house and will become law. what that does is turns the cliff into a slippery slope. it means that there isn't an event on the first of january that will actually pitch us immediately into a recession. there is a compromise here, which is those over $250,000 of income will not pay the extra taxes. so the immediate impact that would have taken us over that cliff is no longer there. but we still need cures for the deficit. we'll still have a debt ceiling debate in march or april. i'm sorry, the good news is, this political tussling will go

on for a bit longer. >> how will this impact the economy and do market forecasts reflect a slowdown that should, according to what you're saying, happen in the first quarter? >> yeah. i mean, there will be pretty slow growth, partly because of the disarray in washington. partly just because of the debt overhang, the deal averaging process that's going on in the economy. this is still going to be a 2% to 3% growth economy next year. and the way that you get to 2% to 3%, is that you will see some modest moves on the deficit in the first half. you will see a lot of political tussling over the terms for raising the debt ceiling. it will be pretty messy, and it will create volatility. but i think that ultimately the fundamental strengths of the u.s. economy will continue to come through. >> including corporate earnings? do corporate earnings estimates, are they overstated for the first quarter, given what we're -- as we tick closer and closer to the cliff, should those estimates start coming

down? >> probably not. i suspect the third quarter of this year will actually be the lowest for several quarters, in terms of profitability. but things i would point to that are improving is the renaissance of american manufacturing, which is driven by productivity, it's partly the fact that we have lower energy costs here in the u.s. than other countries do. not just natural gas, but a lower oil price. so we have lower energy costs. and that's, by the way, fueling american jobs to an extent, in spite of washington. and the housing market, it's reached bottom as it appears in the country. i think there's room for cautious optimism. bearing in mind washington still could produce a recession if they cannot come to any agreements and get their work done. >> in orders of magnitude, manufacturing is not returning as you would expect in the united states. i appreciate the headlines. but the figures are small compared to the number of jobs that have been lost. >> yeah. no, for jobs, that's absolutely

right, simon. i think that the thing to bear in mind with manufacturing is, productivity is now so strong, that even quite a large manufacturing plant of itself does not create a lot of jobs of the then you've got suppliers. then you've got services around. then you've got all the technology used to get that productivity. so the cascade effect through small and mid-size businesses are an improvement in manufacturing, has actually been quite strong. >> as far as the market is concerned, the case is made by many people that the markets are ahead of what we're seeing in the economy. >> yeah. >> so you can assume in europe and the united states that you get the rebound in economic growth in the second half of the year, which is what you're saying. if that doesn't materialize, the market is mispriced at this level and could correct, is that a fair comment? >> some risk is there, simon, i would agree with that. but i detach the probability of a recession next year, or a very disappointing second half, i would say that's only a 20% or 30% probability. that's not the main -- most likely washington will muddle

through. we'll get some messy compromise. it will produce volatility. it won't feel very good, but it will be a bit like this year. you're up 10% to 20% depending on what index you look at, even though it wasn't a very sort of happy experience during it. >> finally, what the fed did this week, jim, is it a step toward targeting gdp outright, and is that an appropriate safety net given all the headwinds you're talking about? >> in a technical sense they could target the nominal gdp, that would make more technical sense than what they did. the linkage between banking sector liquidity as we discussed before and the job market is pretty tenuous. but i think the feds in qe3 and in the move this week do things that don't do much good, but they don't do much harm. >> jim, good to see you. >> thank you, melissa. >> david faber breaking the news in the last hour.

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breaking news on general electric. approving a 12% increase over quarterly dividends. the company is also increasing its existing share repurchase program by $10 billion, extending that program through 2015. shares of ge up by quarter of a percent. again, increasing the quarterly dividend and increasing its buybacks. >> we'll see how that does. yea. as i first reported this morning, or we first reported at least this morning, best buy's board richard shulze agreed to extend the deadline for him to make a potential bid to buy the company that he founded.

how is this all going to play out now? bill george is on the board of goldman sachs, and good to have you. i wouldn't want to be a board member right now at best buy. if this guy doesn't come with a bid, you're probably in a sense in a better way, because if he does, man, making a decision as to whether to sell at a price that one can't imagine would be very high would be an awfully difficult one. what do you do if you're a board member right now? >> this is a very tough call. i'm actually surprised that the board extended. they had no obligation to do so. i'm not surprised that schulze pulled back. schulze wants total control and dealing with the private equity guys. they're not going to give him total control. so i think he's struggling to put an offer together right now. i think the board, the situation must be thawing between schulze and the board for them to extend. and i think they have a lot of confidence, and i have a lot of confidence in the new ceo.

he needs time to get this thing turned around. jcpenney and other places, it doesn't turn overnight. he needs time to get it done and maybe he could see better results and the stock will start reflecting those better results and increased confidence. they're at rock bottom right now. >> that does give schulze the time to take a look and see whether it's at a rock bottom, how christmas was, how the fiscal year went. and his potential backers as well. you know, but where does it go from here? if schulze has time -- well, actually back to the point you made about the board maybe not having extended the deadline. it makes sense, doesn't it in a sense, they give the guy the last chance, and if he can't come up with it at that point, all bets are off? >> exactly. if he doesn't come up with an offer, see, they shouldn't be selling at rock bottom. they've got to look at a price in the 20s. i don't think that board's going to go for any price less than $20 a share. >> that's almost 100% premium.

>> well, yeah, i know. but you've got to look where the stock was and how far it's fallen. and again, you don't sell a company at rock bottom. i think jolie has the right strategy. he's operated under a private company, carlson company, that was private. he can operate with schulze. he can operate in a public company. i think he needs time to implement his strategies, restructure the organization. he said he will match prices with online prices. and i think he's getting very aggressive and he's really focusing on service to give himself the margin. there he has a clear competitive advantage over amazon. so i think he's got the right strategy. frankly, schulze was the one that led them into the difficulties. he's not a panacea. >> bill, is the message then that perhaps best buy shareholders might be underestimating the traction that it may be getting, or may be seeing in the near future?

if jolie is really buying himself some time, is the hope that there will be proof of his efforts by next year? >> i think so. and i think that's what they're looking -- i think that's what the board's looking at. otherwise they would just tell schulze to go away. they have extended it to unilateral extension. i think they have a lot of confidence in the strategy. however, i would be a bit cautious about how fast the results turn. look at jcpenney, ron johnson did a lot of creative things, but it takes time to turn around and old line retailer. look at sears, that's probably never going to turn. i think jolie is on the right course here. and he's got a winning strategy. one that schulze didn't have. and i think he's going to pull it off. but he may be more than three months, he may be tied beyond that. but we'll see. i think the board is acting responsibly trying to get the price for the shareholders. i'm not going against going private, they just have to make sure the public shareholders

don't sell out at rock bottom prices and are treated fairly. >> i can't imagine he will nail a bid at 20. if you're right and they won't accept anything less, he's going to have his chance to turn this thing around. bill george, thanks, as always. >> thank you. >> we have an important interview coming up. one of the most influential voices of the tea party. congressman mick mulvaney speaking out about boehner and much more. ♪ [ male announcer ] 'tis the season to discover the kid in all of us. enjoy free shipping and great values on your holiday shopping from l.l. bean. can i help you?

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>> let's stop over to the cme and check in with rick at the santelli exchange. a heck of a day around the world for various indices, rick. >> definitely. i tell you what, one thing i'm looking at is china. we'll get to the charts and the shanghai composite in a minute. but, you know, is it time to bring out the good china? this is what many traders are talking about. consider this. what was it, about four, five weeks ago that china pretty much completed their once a decade leadership revamping so they have their new leaders in place? and all of a sudden now let's look at the charts. let's look at how the shanghai composite has looked of late basically the lowest levels

since 2009. but look into what happened recently. boy, it has really gotten some turbo thrusters and it's really rocking it up. now, everybody of course understands that data in china might be questionable. in my realm down here most traders think data everywhere these days may be questionable. but the point of this is that we can pick up a lot of stories about the glut of commodities and that is easily explained because we have a global slowdown. we have japan recession, europe in recession. which really makes the move in china that much more interesting. the world's second largest economy, export economy, dealing with recessions, and some of their most important export markets like europe dealing with issues in the united states so is this a real rally? i started asking people and there are a lot of people that are very smart about various aspects of china. as a matter of fact, one of my sources said that this weekend may be one of the most important

economic conferences that deals with china in china. the work economic -- the economic work conference was held last year, december 12th through 14th. now it's really hard to nail down when it is but after it happens we will start to get headlined. so the long and the short of it is after talking on the floor a funny thing happened. you know, as i was asking many traders, do you believe this is real in china? is this orchestrated based on the new leadership? is it too predictable? if it walks like a duck and quacks like a duck. and the response is really interesting. is it any different anywhere in the developed economies the way the fed manages our economy, the way the europeans are trying to manage their economy. i guess a valid point. i will close this out with yesterday in my opinion when we were talking about fed exit we're a long way away but i think the catalyst will be the markets. i had a lot of e-mails. people disagreed. for the reason we're discussing

houchlt can the markets turn when the fed is managing interest rates? think about all of the different mutual fund inflows. there will be a time somewhere down the road where they just won't want to hold treasuries and that selling will cascade and the market in the end really will in my opinion cause the top whenever that treasury market starts. back to you. >> can i point out something specifically on china on the shanghai. a 4% bump today. it hasn't passed through to the miners and materials stocks today. there is a rumor overnight that the state backed institutions would bind shares in the market today. and that's why china -- >> right to my point, simon. right in sync. and i think that, you know, managed or not, but certainly use the second largest's economy's information as a big variable so we have to pay close attention. >> all right. thanks, rick. see you later. tweet time. one club in china has embedded gold bars and customers are literally walking on gold. instead of putting gold bars in

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gold bars in the floors of the club. customers literally walking on these things, wow. times are good in china. we asked instead of putting gold bars in the floor, china said use the bars to do what? john writes china should work with apple to manufacture and sell solid gold iphones to the rich. maybe that'll fix the company. bret writes buy more treasuries as a belated birthday gift to bernanke. jeremy writes china should use the bars to build a bridge for the fiscal cliff. now that would be nice. >> that would be nice. >> we had the bridge to nowhere. we should have the bridge of solid gold. anyway. see you tonight. >> yes. >> see you in half an hour. we'll talk some -- draghi the first of the year. pretty interesting. >> and the summit. 27 heads of state represented. >> thanks for all the good work today. >> see you next week. have a great weekend. >> here's what you missed earlier this morning if you're just joining us. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> i'm begging members of

congress and the executive to please get something done here that reassures consumers, reassures business operators, most important of all to create the jobs in america. >> there are going to be some revenues involved but there need to be multiples of that in entitlement cuts. so i've taken enough flack on both the right and the left of this equation to know that i'm in the right place. >> every company on retail is saying, look at us. behind the scenes, guys, tell me. how is it going? they all say, what, are you kidding me? we got two weeks here. we don't know. i mean, they got a gift cliff. right? the buy cliff. >> right. >> there are other cliffs out there. >> we're back at the opening bell here. >> the real question now is does it affect the consumers? we have not seen consumers go backwards although you saw some confidence numbers come down. i think if we get this solved soon the consumers who have been pretty steady will continue to be there. >> if there is a sense of

movement or excessive sense of fear, you can see both sides just deciding we don't need to go over the cliff right now. let's delay this for a little while. that's not the best outcome by far. but it is a possibility. >> we're checking our lists as the "squawk on the street" countdown to christmas continues. ho, ho, ho. >> made it to the end of the week. good morning. live here at post 9 of the new york stock exchange. let's check on the markets this morning. the dow basically flat. in fact, almost exactly flat. we've been really on either side of the flat line by about 20 points or so. nasdaq more decidedly negative down about 14 points. shares of best buy are falling after yesterday's rally. faber breaking the news earlier on the show that the deadline for best buy's founder richard shulze to offer a bid for the company was extended until february 28th. then there's adobe shares getting a boost today the software company reporting a 28%

rise in profit after the bell as we look at the stock which is currently up almost 5%. let's get to the road map this morning. the iphone 5 hitting china today but early reports show the demand might not be what apple needs to launch a comeback in its stock. we'll talk to an analyst who still has a buy on the name. then one of the most prominent voices in the tea party, a man who has voted against speaker boehner many times congressman mick mulvany will join us thrive give us his take on the fiscal cliff and what congress needs to do to get a deal done. plus, after his global game of hide and seek riveted the country for weeks john mcafee is speaking out. we'll find out what he said about being on the run and how he feels about the charges against him. giving your friends benefits. boom rang is changing the social gifting game and raising big money as well. the ceo is going to join us live to tell us what is next for the company. let's start with apple. the iphone 5 making its debut on shelves in china today as apple takes on its cheaper rivals. will it get a better reception

than the ipad mini? we have an analyst with a buy on apple with a price target of 750. good morning you to. happy friday. >> happy friday to you as well. >> we're trying to get a sense of what the environment is regarding the 5 halfway around the world. the video certainly looks encouraging. a lot of enthusiasm around the stores and yet some analysts around the street actually bringing their numbers down saying it's not going to do as well as the 4s. what is your take? >> you know, i think there is strong demand for 5. the issue with china is there was some weather related issue and issues people had to prebook the order. a lot of the -- we have people seeing the supply chain for the march quarter and december quarter. if you take a step back from consumers the iphone is one of the leading phones out there and it still has a lot of demand.

ipad is still enjoying its lead in the market. it's still the leading tablet. ipad minis clearly some of the higher end and ipad the momentum for the whole category so we are positive about the company. >> yeah. i mean it's hard to have a discussion about apple fundamentals. it's been hard for weeks given the calendar issues where we're going into year end. a lot of year end selling. i mean, you look back to the year to date gains now and they don't look that stellar. 27% for the year is nice but i wonder if you think it ends the year even weaker as people exit the name before december 31st. >> it's possibility. given between now and the end of the year, the trading would be choppy but when we take a step back, take a look at the fundamentals, let's not get stuck in the data points coming in right now. from the fundamentals, it still is strong growth in the

category. granted not as strong as the mid year which is where a loft the growth is but even at the far end which is more profitable there is growth. tablet is still the leader over there. fundamentals are still strong. we think the selling is over done. it is going to come back as we go into the next year. >> do you wake up every morning and the first headline you look for is any progress in the talks with china mobile? i mean, is there any larger potential catalyst at this very point? >> yeah. i think that is one of the c cataly catalysts where there has been a lot of flow in and out of that one. i think that is one area where they could definitely see some catalyst and the production also which many have speculated it could be tv ads also have been talked about so there are a lot of other things they could do. at the same time even with the current portfolio and distribution they have some head room over there. >> finally, you do see december being pretty much the trough for margins, right, both on the gross and operating level? >> yes. the thing is that this is a

quarter when they're launching, refreshing their products and phones, tablets, and so they clearly are refreshing a wider product that is depressing the margins. we think those margins snap back up as they move toward the later -- the life cycle of these parts. >> all right. well, a lot of attention being paid today at 511, getting uncomfortably close to 505 once again. have a great weekend once again you too. >> let's get over to bertha coombs for a quick market flash. >> investors this morning ticker symbol for southwest airline, a 52-week high. it sees a billion dollars in revenue gains in 2013. seems all those baggage fees are adding up. the airline says holiday bookings look strong but it estimates a cost of superstorm sandy at 15 to 20 million in operating profits for this

quarter. they also planned a 300 head count reduction through attrition they say. back to you. >> all right. thank you so much. house speaker boehner met with the president at the white house for almost an hour last night but there was no immediate sign of progress in resolving the fiscal cliff deadlock. earlier in the day both sides criticized each other for a lack of progress. this was the speaker yesterday. >> republicans must solve this problem by getting the spending line down. the president wants to pretend the spending isn't the problem. that's why we don't have an agreement. >> we're joined this morning by a republican member of the house budget committee congressman mick mulvany of south carolina. congressman, good morning to you. >> hey, guys. thanks for having me. >> it's been quite a week as we watch the progress or lack of progress in these talks and now so much of the attention is being paid to the house republicans and those that agree with the speaker, those that have been sanctioned more or less by the speaker, if there is a hold up, is your caucus of the

house part of the problem? >> keep in mind we don't vote for or against people. we vote for or against legislation. so we'll look at any bill that comes before us. what is not highly reported is what mrs. pelosi said yesterday which is that entitlements are absolutely off the table. keep in mind if mr. obama and mr. boehner come out with a deal it is generally accepted they'll need democratic votes to pass it and that means that mrs. pelosi has to participate. i think yesterday she threw a major hurdle into this process by saying that she won't even deal with entitlement reform. >> right. so then there is the senate minority leader mcconnell who says, well, let's try to force her hand or try to force the white house's hand and get them to talk about entitlements by giving them what they want on rates. why is that not a smart strategy? >> i'm all for putting forth some legislation. we've talked with conservative leaders in the senate, senator johnson, rubio, i think it makes sense to come forward and say

here is what we would like. here is where we are on rates and flush the issue. you may see some progress on that at least in the senate next week. >> when you say here is where we are on rates, meaning what? we are willing to go up to something below, not quite to 39? >> personally or as a party i'm not sure. you'd have to ask the senate that. >> i realize there's a bunch of different -- the speaker does not have everybody's proxy. i understand that. >> right. listen, i'm not going to negotiate with you folks on tv. i think you understand better than anybody that is not how good negotiations work. here's what i've been telling folks. last year i voted to raise the debt ceiling. di not come to washington expecting that would ever happen but di it as part of the program called cut, cap, and balance because it fixed the problem. there are a loft us in the house who will vote for something if it fixes the problem. it is not just this little problem dealing with the fiscal cliff but the overall spending problem. they get something that fixes that i think you'd be surprised what some of the republicans are willing to do. >> the "new york times" this morning quotes former

congressman charles vasser a republican of new hampshire. in his view, things are going to get tough for the gop if we go past the year and there is no deal. his quote is maybe not immediately but, quote, by the third or fourth week of january the house republicans' life will be so miserable, their life will be so unbearable as americans wake up to these bigger withholdings that they'll just want to get done with it. do you agree? >> i give charlie some credit. i don't think he is a former congressman here. he is still here during the lame duck session. let's be politically honest with each other. face it. the real key if you go over the cliff is who gets blamed. if the president gets blamed you'll see him starting to compromise a lot more. if the republicans get blamed you'll see them want to move some more. that is the unfortunate reality of it if we do go over the cliff. >> congressman mulvany of south carolina thanks so much for your time. we'll see you soon. >> thanks, guys. >> meantime, facebook trading sharply lower on the day of its fourth lockup expiration. when we come back we'll talk to the author of the facebook era about how the company and social networking are changing the face

of business. but first rick santelli is working on something for a little later on. rick? >> yeah. a little later on. bottom of the hour we'll be talking with mark graham from southwest securities. europe seems to be fixed. it's fixed. even though they're in a bit of a recession, a lost generation in spain, are they really fixed? we'll ask mark grant the tough questions bottom of the hour. , we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade.

facebook experiencing its fourth lockup today.

today 160 million shares hitting the market. our next guest is an author of the book "the facebook era" clara shih the president of a company that has enterprises with large store networks on facebook linked in and other social networks. welcome back and good to see you again. >> good to see you. thanks for having me. >> i wonder what your take is short term on the lockup expiration. we've had it both ways this year. where some of the shorts are surprised. last time this happened in november stock was up 12%. does that happen again? >> well, i'm not a financial expert but i am very bullish on facebook in the medium and long term. >> yeah. explain that. why? you say their best days are still ahead. >> absolutely. i mean, facebook is one of those companies, they have a billion users and the reality is there are all kinds of ways for them to monetize those users. we're already seeing great growth internationally and with new ad formats such as mobile and news feed formats. >> how would you characterize the speed at which that monetization is taking place?

we had a conference call which some call the best call of the year which did reverse the sentiment regarding them and mobile making money on mobile. how well is it working now? >> i think what we're seeing in the last few months really underscores the ability to innovate quickly and the results we're seeing from a quick rate perspective on the mobile ads are literally orders of mag any tuite greater than anything we've seen before. >> are you seeing advertisers get religion on that front or not? is it likely that gm comes back and says, you know, we made a huge mistake by getting a divorce from you guys? >> i think we're going to see a lot more of that coming. >> can you be more specific? >> i think advertisers realize they need to be where customers are and we're seeing a seismic shift today in terms of how consumers interact and expect to engage with their friends, with the brands and organizations that mattered to them, and social is a crucial part of that mix. >> you talk about arbitrage opportunity and disruptive

innovation which i think makes a lot of people's eyes glaze over but your point is that social media is relatively new and some of these early adopters are plowing new ground. can you just talk about that for a second? >> that's right. i think with any new technology there is a limited window of opportunity for a first mover advantage. we're certainly seeing this with social media where if you're the first insurance agent or among the first realtor or the first brand to get on and connect with the billion users before that channel becomes spammy then you have a real advantage and you gain share quickly. >> and companies that have done a good job of that in your view? >> if you look at some of the most forward thinking innovative companies, farmers insurance group, 24-hour fitness, shackly corporation, all of these companies are really taking advantage of these new mediums to establish long-standing relationships, loyal relationships with their customers.

>> a long road just getting started but some of these guys are making an impact early on. thank you for joining us. chocolate lovers listen up. there could be a chocolate crisis on the horizon. bad news. the ceo of max brenner will join us after the break to talk about what exactly that is and get a check on holiday sales if this anchor desk is any example they're doing well. we're back in a moment. there is no mass-produced human. every human being is unique.

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here is a look at how some of the sectors are performing today. materials and industrials, financials health sort of in the middle and energy and tech the lag erds with the dow hugging close to the flat line up less than two points. over to bertha coombs for a quick market flash. bertha? >> one of the sectors today a little bit of pressure, our chip sectors. jeffries this morning out with the note saying that they have

seen some indications that over the last 24 to 48 hours that assemblers for apple's i-phones have gotten some component cuts and they're seeing larger cuts as assembly bottom links have not improved. he thinks this will weigh on suppliers and that is what we're seeing today. qualcomm, cirrus, triquint and if you look at how the stocks have performed as apple declined getting back toward $500 today they've also been under some pressure. cirrus in particular has been off about 16% over the last month falling right along with apple. carl? >> continues to lose ground here this morning, bertha. 508 is not far away from 505 the november lows. thanks. rising milk prices are contributing to what some are calling a milk crisis for the dairy industry. could that lead to a chocolate cri crisis this holiday season? please tell me you did not bring any samples. >> you'll have to wait.

>> holidays are tough enough as it is. how is business? how is the holiday shaping up? >> you know the holiday is shaping up for us very well. robust, customers seem to be able to pay for the products and we have, you know, a long wait for the chocolate bar on union square and our kiosk at bryant park is doing very, very well. we're very happy with the holidays so far. >> anybody who lives in manhattan knows where you are and how long the lines can be. are people showing more of a willingness to splurge? are you sensing caution there? what is the mood? >> the mood is good. it's a holiday, festive mood. are we seeing any caution? i don't think we're seeing it in our brand but i think the economy speaks for itself and i think there is a cautionary kind of waiting to see how government deals with the economics that are on the horizon. >> speaking of which we were discussing some cocoa futures, dairy futures during the break. is this related to the fiscal cliff? what is the issue facing the industry? >> well, on the milk prices you

have a producer's price of $6 a gallon versus a supported price of under $3 a gallon. if they don't continue on the fiscal cliff to solve these and bring the legislations from, you know, the 2008 legislation and the legislation from previous years, falls back to 1940 pricing. pricing rules, which will move the price of milk up and we hope that doesn't happen. we consume quite a bit of it. >> how active are you as a participant in the discussions down in d.c. right now? >>ly am not active but certainly watching. >> say we go over the cliff, worst case scenario what happens to pricing in your business and how much will the environment support? >> well, for us we'll have to take a look at how we can better finlt r efficiently run the operation which will make up for several points of change in our pricing matrix and cost structure. >> can you give us a characterization of u.s. versus international markets? how are we holding up versus the rest of the world? >> we're seeing, we have

locations in australia which obviously is now being subject to the economy in china. if china continues to click up toward an 8% growth, predicted growth, then australia would do well. if it falls below that australia really feels it from a consumer standpoint. in asia we -- the rest of our asian markets, singapore, we're not seeing much fluctuation from the consumer. our israeli market, it's subject to the, what goes on in israel but very robust there, you know, given that there is no political conflict. >> the world is getting a little more interesting today. >> very. >> we're sending 400 troops to turkey to run some patriot missile batteries. that's maybe a topic for a different day. i just -- one last thing on some of these signature dishes. chocolate pizza? >> chocolate pizza, carl. >> what's it like? >> delicious. we'll have to bring you one. >> and then chocolate injections. this is what, melted chocolate that is, that you literally squirt into your mouth? >> you really do. people do it right on the spot.

it is a really fun product. >> i'm not bringing my 3-year-olds to your store. not sure we can handle the sugar high. >> thank you so much. >> just a few moments left in the trading day. in europe we'll get the close and some of the details on the u.s. right after this break. and we can save you 10% on ground shipping over the ups store.

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a day of mixed data for europe. up tick in french pmi. german misses, some cpi numbers out of the eurozone. of course there's also the ft which names mario draghi their person of the year but wrapping up an incredible year all around. >> we should mention the 27 heads of state for the european union have just finished their summit. eight hours of late night talks last night effectively as they all head back to their respective capitals. what they've done is kicked further integration way off into the summer so no great decisions coming out. a very good week for merkel. she has basically cleared her in tray of potential near-term problems. remember this is the week they agreed to give greece now within days 34 billion euros. they've done a deal where the ecb will regulate the biggest banks in europe and, importantly, the germans will be exempted, state run banks, savings banks. so the skeletons can stay in the

german closet there as far as the banks are concerned. that was important for the germans. it is ironic in a year when so many people called for a breakup the european union this summit, poland actually said we'd like to start off applications to become the 18th member of the eurozone. that will play out during the course of next year. as far as the stock markets are concerned, today is relatively flat overall. no follow through from china which i mentioned earlier. i thought it was very interesting. here you go. >> the european markets are closing now. >> some are red. some are green. if you check the data you'll see we haven't really moved at all today. china was up 4%. shanghai was up 4% overnight. normally you would expect the australian miners, global miners listed in london to bounce on that. they didn't very much today. and that is partly because it is a suspect view of what happened in china today that perhaps the state backed institutions were buying stocks to artificially

boost the picture there. however, europe overall top 50 blue chips are at their highs for the year as you can see. a gain of 13.5%. i wanted to make one point. a comparison between europe and the united states. this is how we traded during the course of the year. top 50 blue chips in europe, dow jones industrial average. if you look at the tape here it seems like the market is rising every day despite the fiscal cliff maybe because of the feds. who knows? if you look here how much more might the u.s. have risen if it didn't have the fiscal cliff hang over. the point i'm making is that since the election in november and the uncertainty europe has -- many blue chips around the world have been able to accelerate off much more rapidly than you've had here in the united states. so yes. the market is rising. but how much more could it have risen without the fiscal cliff hangover? so net-net we have almost twice the gain for the year on the european stocks as compared to the u.s. stocks.

arguably the european stocks were cheaper and you've removed risk and therefore it could be a big buy. 2013 is still going to be rough in europe. in the south. record unemployment, you've got extreme poverty. but today the data which you're limited to indicated the contraction is slowing on economic activity in europe and the german private sector is growing which may mean germany avoids a contraction in the fourth quarter. >> it's been said this year was about sort of arresting the decline. next year is about addressing employment and growth. >> i'm -- hopefully growth in the second half. >> right. first things first. thank you, simon. have a good weekend. mary thompson is on the floor watching what is moving at the nyse. >> hey, carl. not much is moving. or i should say of course not moving in a very big range. the dow has been stuck in about a 30-point range so far today. we're seeing weakness as you've mentioned throughout the session of course in apple and that is weighing on the nasdaq composite which is off its session lows today. but in general, what investors

have done, actually let's talk about apple here. going into the end of the week it's down about 4% and if it closes lower this week as it looks like it is going to do this will be the tenth week out of the last 12 where apple is finished with a weekly loss. again, the price action there on concerns about demand, etcetera, and of course some investors selling apple to get ahead of an increase in the capital gains tax rate, all of that putting pressure on that stock and of course the nasdaq as well today. quick check of the sectors, along with tech which of course is being pulled lower by the weakness in apple we're seeing weakness in energy stocks. this despite strength that we are seeing in oil off of those stronger than expected manufacturing numbers in china. materials gaining from the good news in china. industrials also higher in today's session. quick check of the energy sector. this is one the reasons we're seeing weakness. schlumberger which is the largest oil field services company lowering its fourth quarter outlook in large part because of weakness in north

america. that is keeping pressure on the rest of the group today. one area or one energy company that is actually moving higher is the coal company peabody, lowering its capital expenditure forecast for 2013 but it also is expecting prices and earnings to trough in the first quarter so the stock is moving higher on that news up about 2.8%. again the dow is off 14, carl. we're losing a little steam here. back to you. >> thanks so much. i'll talk to you in a little while. rick santelli is in chicago talking a little bit europe as well. hey, rick. >> hi, carl. absolutely. whenever i want to talk about europe i always have to laugh. welcome, mark. >> hello. >> before i ask you my question i want to do it here. let's paint it out. i've been seeing a loft the word harmonize lately. the most recent in "the wall street journal" story talking about socialist leader franz and a lot of this of course has been throttled up because of the

departure of girard depardeaux and harmonization meaning i don't think mr. holland likes it when a citizen to avoid the 75% tax just moves right across the border to belgium. do you see this as a growing issue? you know, they harmonize the budgets. now it seems they want to harmonize tax rates. >> what they're trying to do, rick, is form some kind of union like the united states but i don't think that is possible. and of course if you raise taxes to 75%, you're going to get people that have money that do pay their taxes. they're going to leave for other places if it's at all possible why work and give all your money to the government whether it's in the earth or the united states? whether it's in europe or the united states? >> when we open up the papers and see what the ft did in terms of the man of the year award, i ask you, is it all fixed? i mean, i understand that we have seen a major improvement in

funding but, you know, when i used to trade the fundamentals of an economy, how it creates growth, from where i sit it looks like a lost generation in spain and i can go on and on. is it really over? is it really done? i mean, it is just like a short recession and now we'll be off to the races? >> no. rick, i think you are 100% right about this. i think we're having a lull. some of it having to do with the weather in europe at this time of year. i think once we get to the spring you'll see a lot more protests in greece and spain and italy. also i think if you look at the real numbers, rick, the real numbers are not as europe gives them to us. i mean, the real debt ratio, if you count it like ge or ibm and greece, is 450%. it's about 260% for italy and it's about 230% for spain and all of these things that aren't counted are going to come to roost over a period of time. so i think we're in a lull right

now. i think mostly because of draghi and his comments that we're going to give money forever and save the world that i think as we head into the new year that's going to come to a conclusion. >> last question, we're running short of time. if you had an extra thousand dollars to invest right now, in something simple, in any country in the globe, where would you put it and what would it be? would it be fixed income, equities? >> fixed income, as long as you can go. investment grade. there is going to be tremendous compression. and i think that's the place to be. >> i'm in agreement with you. carl, melissa, back to you. >> thanks a lot, rick. let's get over to bertha coombs for a market flash this time on u.s. steel. >> u.s. steel materials today the best performer, the best performer this week and u.s. steel is the best gainer today in the s&p materials sector. the stock has had a phenomenal week on real big volume. fitch out with a note last night saying that they think steel

makers should see some modest margin improvement but that is not a modest move when it comes to stock today, carl. >> no. and one of the best ticker symbols out there. thanks so much. he's been on the run from officials in belize but this morning he ended up on "squawk box." former tech titan john mcafee has been caught up in a murder investigation but his explaination of the situation keeps getting a little stranger. robert frank has been following the story this morning. killer interview this morning on "squawk." >> thanks so much. well, he did make a lot of news on our air this morning. he started with his insistence that he did not kill his neighbor in belize. >> let me be clear i had nothing to do with the murder of gregory fall. the authorities know this. there will be no charges. this is like every other charge they have leveled against me since the 30th of april of this year the first one being running a meth lab then running an antibiotics lab without a license which is a serious crime in the third world and on and on. this is about the 11th attempt to charge me with something. i will not be charged with this.

>> now mcafee of course has been on the run for weeks as police in belize want him for questioning in that murder. mcafee was deported from guatemala to miami and admitted to faking a heart attack in guatemala and faking his location in recent weeks. he told us he loves pranks but insists his fear of the belize government is very real. >> certainly feels crazy to me. i do love hoaxes and elaborate hoaxes but not ones that involve my detention in guatemalan jails, the shooting of my dogs, the harm to people. this is not a hoax. if it is it is the worst in the world. >> mcafee is saying the belize government is trying to get him for not paying bribes. the belize government denies that charge to us saying mcafee should answer these questions and is, quote, bonkers. what will mcafee do now? if he is charged with that murder he could be extradited under a treaty between belize and the u.s.

he told us he would return to face those charges or answer any questions from the u.s. he says he is worth around $5 million or less. he just bought some clothes yesterday from dress for less in miami. he said finding a job will be easy, he said, quote, i'll shine shoes if i have to. carl? >> probably take him at his word, robert. 5 million now. any idea how much he was worth at the peak? >> you know, at his peak he was worth over aundr dollars. that of course is before he made all of those bad investments in real estate and lehman brothers. when he got to belize in 2009 he was worth around 4 million. so if we believe him, he is right about where he was when he got to belize a few years ago. he says he just can't get at that money right now which is frozen by the belize government. >> yeah. the saga continues. thanks so much. >> thank you. >> good to see you again. bilbo has the weight of mgm on his should thers weekend. we'll find out why mgm has so much riding on "the hobbit." later are you tired of

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now one of the newest partners reveals whether facebook is the one to own in 2013. walmart is down big this week. can it reignite its earlier run? two traders two opinions. one big debate, carl, at the top of the hour. >> all right. we'll see you in a few mints. thanks a lot. the highly anticipated prequel to "the lord of the rings" trilogy "the hobbit" opens today and mgm and time warner have a lot riding on "middle earth." julia boorstin is live in l.a. with more. >> well, carl, bilbo bagins is under a lot of pressure. not only does he have to free a dwarf kingdom but mgm is counting on him to pave the way for its ipo. mgm held off plans to go public hoping strong performances from skyfall and the hobbit trilogy would bolster the valuation. it is expected that mgm will file for an ipo in march or april between the flood of revenue from skyfall and the hobbit. despite some mediocre reviews the 3 $d the hobbit an unexpected journey is expected

to set a record for the biggest ever opening in december with north of $88 million. mgm needs the three hobbit films to live up to the $3 billion lord of the rings trilogy because mgm has bet big on its potential. it borrowed half a billion dollars in february and spent another $590 million in july to buy out icon's 25% stake in the company. time warner also has a lot riding on hobbit. its new line cinema coproduced the film and warner brothers is distributing it. the pressure is on to fill the void left by the end of harry potter since it ended last year. warner brothers' market share has slipped to third place. so just how much does the hobbit cost? the first two movies in the franchise reportedly had a price tag of about $500 million just to make them. but marketing costs will certainly bring those numbers much higher. carl? >> yeah. all sorts of innovative ways in which they shot the film. it is going to be interesting to see how it is received this weekend, julia. thanks a lot.

julia boorstin in l.a. it is funded by the same people who created groupon but bommerang is a lot more than daily deals. it is taking social gifting to a whole new level. namely, the local level. the ceos are going to join us live after the break. and i took nyquil,e a cold, but i'm still stubbed up. [ male announcer ] truth is, nyquil doesn't unstuff your nose. what? [ male announcer ] alka-seltzer plus liquid gels speeds relief to your worst cold symptoms plus has a decongestant for your stuffy nose. thanks. that's the cold truth! it's easy to follow the progress you're making toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing where you stand, turn to us. wells fargo advisors. where you stand, turn to us. ...so as you can see, geico's customer satisfaction is at 97%. mmmm tasty. and cut! very good. people are always asking me how we make these geico adverts. so we're taking you behind the scenes. this coffee cup, for example, is computer animated. it's not real. geico's customer satisfaction is quite real though.

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the shold shopping season is in full swing. have you finished up your list yet? if not, bommerang may lead you right to what you're missing. it is a social gift giving service that lets you gift tangible items to friends through facebook. using the recipients' facebook and geographic location it'll come up with a short list of personalized gifts in their area. things like dinners, spa visits, or outdoor activities. bommerang is hoping your friends will help you discover a local business you never knew was right around the corner. >> interesting concept. zack smith is the cofounder and ceo of bommerang and joins us as part of our continuing series "squawk on the verge" and he is in chicago today where it is like every other exciting start up comes from the windy city. good morning to you.

>> good morning. thanks for having me. >> i can see how this sort of solves the problem. you have a friend whose birthday is coming up. you don't know what to get them. this opens up a whole new window of ideas of things that are near them not you. right? >> exactly. we use facebook data to find all of these giftable moments that are happening in friends' lives like birthdays, anniversaries, new jobs and then based on where they live, some of their demographic characteristics we'll recommend a set of gifts from the best local and also online retailers. >> you started in one city. you've now expanded to three more i think. you have banana republic, gap, travelocity, but it sounds like the focus is more on the local business end. how do you balance those two? >> that's right. we've surveyed consume ersberg. 70% of them tell us if you actually prefer to give a gift to a local business maybe a gift card to a bar or a day at a day spa. there is no real platform offering that and so, you know, we picked some cities we felt

like may be under served, or huge opportunity, chicago, houston, minneapolis/st. paul, and have partnered to create really neat gift packages you can send to friends. >> you got funding, the cofounders of groupon, you yourself cofounded the company with a former vp from groupon. to what degree and i ask this delicately, are you taking lessons from their experience, right? and also is there any way to take advantage of the data that obviously groupon has had a lot of time to collect? >> it's a great question. i think groupon really brought local businesses into online e-commerce in a really interesting way and created a bunch of new opportunities gifting being one of them where we can now take local businesses that are a lot salvier with the web and provide a new sales channel for them not necessarily deeply discounted offers but gifts. so we're definitely following the lead that some of the daily

deal sites kind of created for us. in terms of data, yeah. we look at what sells well in the local space, from these various daily deals sites. we use a lot of facebook data and from other partners as well. >> it sounds like discounting has always been part of the groupon model. you seem to be relying a little bit less on a major discount to a service or product. >> yeah. that's right. i mean discounting is not as much a driver of purchasing decisions twle comes to gifting as it is for personal consumption. and it is one the reasons we're able to get such top notch partners in all of these cities. we do very little discounting so it is great for their brand, great for their bottom line. >> we've heard this in the past as people have looked at ipos that didn't work out or have not worked out ideally. is your appetite for going public tempered by say groupon's experience? do you want to go public less or maybe go public a little later than you ordinarily would? >> yeah. i mean, we're still building our business and we're a long way from thinking about that but

we're excited about the space and americans spend a hundred billion dollars a year on gift cards alone. there is going to be opportunity for multiple big players in the space. i think we'll be one of them and going public is something we'll worry about in a year or two. >> that's true. you have to worry about it when it is a possibility. in terms of funding it is great to have light bank in your corner. huge guns there. is raising additional or subsequent funding getting harder or easier than when you first started the firm? >> i don't know how much it's changed. i think it is still based on performance and we have a lot of interest. we're actually going to go, you know, raise more capital next year to continue expanding our offerings into new cities and continue to build our technology and, you know, not anticipating any real changes in the landscape. >> hopefully you'll get attention from the folks in chicago and austin and new york. interesting concept. appreciate your time. >> thanks for having us. >> thanks so much. zack smith. of course joining us from bommerang.

have you ever wondered what an $8 million ipad looks like? we're going to show you after the break. having you ship my gifts couldn't be easier.

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welcome back to "squawk on

the street." even though we've seen the market fall back we continue to see the transports. the dow transports are hanging on today. they are near the highs of the session. led by some of the airliners although land star systems and trucker is one of the big gainers. over all transports have under performed the s&p. nonetheless you have big winners like love that are up 20% year to date. >> we are keeping you busy today bertha. bertha coombs at headquarters. thank you. are you in the market for a $25,000 television? how about a $10,000 robot that will go to meetings for you? those are some of the high end, high tech gifts available this holiday season. john ford already owns all of them and is going to tell us how we can get our hands on one too. right, john? >> of course. a lot of people are looking at buying smaller tablets as gifts this holiday season but if that is not premium enough for your tastes here are a few options. starting with an 84-inch tv that costs a little more than 75 ipad minis. >> ultra high definition, full

high definition tv currently will be 1920 by 1080 in res lags. this guy steps it up four times to 3840 by 2160. >> and that is a cool 25 grand. fortunately the store's parking lot is literally a stone's throw from silicon valley's sand hill road. what good is an amazing tv if you are never there to watch it? the perfect companion gift, qb, a $10,000 robot that goes to work for you. >> if you're looking at say a very busy ceo, the one thing that person does not have is a lot of time and there are a lot of people wanting that person to be in a particular location at a particular time for that ceo. and you can't be in two or three places at once. >> qb has a couple cameras, an internet connection and you steer it from a pc like a remote control car. your face appears in the robot's forehead and people talking to the robot can hear your voice. now if all of that is too practical, how about a diamond encrusted ipad 2? that's right. two generations old.

from the uk's stewart hughes. just $8 million. still too practical? check out this diamond encrusted blackberry bold for $1.2 million. to be fair i'm not sure they're selling that one anymore, carl. >> the 10 is still coming. maybe you can modify it for the 10. that is fabulous. take me back to the television. i assume it's only as good as the input you give it, right? if you play a standard dvd it is going to look like a standard dvd? >> that's right. it'll upscale blue ray and sony gives you a server with 10 4-k movies preloaded. it loans that out to people who buy the tv. >> all right. now the robot. did i hear you right? your face appears on the forehead? >> yeah. it's a little kind of a cross between fun and creepy. you can talk to the robot. see the person's face. >> definitely on the creepy. >> it's kind of fun to try to steer it around and, you know, i got to steer it myself when i visited the